The French parliament approved legislation shifting the trajectory of the reduction in the corporate income tax rate that already enacted in the 2018 finance law.
The Finance Law for 2018 provides for a further progressive reduction of the corporate income tax rate to 25%, fully applicable for financial years opened in 2022. The schedule for phased-in application of the progressive reduction will be as follows:
A resident company is subject to CIT in France on its French-source income. In that respect, income attributable to foreign business activity (if there is no treaty in force between France and the relevant foreign country) or to a foreign PE (if a tax treaty applies) is excluded from the French tax basis.
A non-resident company is subject to CIT in France on income attributable to French business activity or to a French PE, as well as on income from real estate located in France.
According to the new legislation, the standard tax rate for 2019 will remain at 33.33%, except for companies with a turnover lower than EUR 250 million (to be assessed at the tax group level, if applicable), to which a 31% rate will apply. The 28% rate, as enacted in the 2018 finance law, still will apply to the first EUR 500,000 of taxable income. Thus, the measures laid out in the finance law was not fully approved by the parliament since the reduction trajectory is shifted
Action before the French Constitutional Court is expected as members of parliament may challenge the constitutionality of the legislative text.
Source: The French Parliament
TPA Global provides solutions in the area of BEPS, Value Chain Analysis for multinationals along with variety of tax, business and educational technologies. Let us show you how to improve your operations and move from “staying out of trouble” to “being in control”.